Bogus travel insurance

Actions part of year-long investigation into bogus travel insurance

February 22, 2010|By Diane Lade, Sun Sentinel

State regulators are charging six travel agencies, including one in Boynton Beach, with using unlicensed agents to sell bogus trip insurance policies through a company never authorized to do business in Florida. Officials said the agencies now may be responsible for some valid unpaid claims - in some cases amounting to thousands of dollars.

The actions are part of the Florida Department of Financial Services' continuing year-long investigation into Prime Travel Protection Services, of Colorado; other companies offering unauthorized travel insurance; and the travel agencies that sold it. Regulators say more agencies may be cited.

Prime and some similar operations insisted they were offering "trip protection" and not travel insurance, which is purchased by hundreds of thousands of Floridians and offers full or partial reimbursement for trips that are canceled or changed. State law requires travel insurance policies to be approved by regulators and underwritten to ensure claims will be covered. But the consumers who bought protection policies assumed they were insured, state regulators said, only to discover they had little recourse when claims went upaid.

Consumer advocates advise Florida travelers to check both if their travel agent is licensed to sell them travel insurance, and if state regulators have authorized their policy provider, by calling Financial Services at 877-693-5236.

The six agencies cited this week all directly or indirectly offered policies through Prime or its affiliates before the company went out of business in January 2009, according to state filings. They include: JB Travel Inc., which also does business as JBCruises.com, of Boynton Beach; St. Lucie West Travel, of Port St. Lucie; Ahoy Cruises, which also does busines as Ahoy! Cruises, of Jacksonville; Diana's Travel South, which did business under several other names, of Spring Hill; Sandra Demore, who did business as CruiseWithSandy, of Port Orange; and Four Seasons Tours and Cruises, of Largo.

Prime allegedly left hundreds of Florida travelers, plus many more nationwide, with unpaid claims when it closed its doors.

The citations warn the agencies to stop selling unauthorized insurance, or face $50,000 fines and other penalties. The state also said any travel agents selling travel insurance must be licensed. Those charges are similar to ones made over the past 10 months against one Florida travel agent and seven other agencies that did business with Prime or its affiliaties. When the Prime case broke last year, travel agencies that offered the company's policies repeatedly said they did not need an insurance license and were not financially liable for Prime's failure, claiming they didn't know the product was unauthorized.

"How could they not know? They gave it to us as part of a package deal," said Harold Sondik, of Delray Beach. He said the JB Cruise agent enrolled him and his wife with a Prime trip protection plan when the couple bought a cruise in 2008, and were told it would cover cancellation for medical emergencies. Sondik never has recovered the $2,800 he lost when his wife unexpectedly was hospitalized and they had to cancel their trip.

JB Cruises did not return the Sun Sentinel's telephone message Monday. St. Lucie West Travel, which had not yet received its state notice, declined to comment. Phil Warmanen, the owner of Ahoy Cruises, also had not seen his notice Monday but said he was "more than willing to conform to whatever regulations there are."

Lee Pemberton, owner of Four Seasons, said he has been speaking with state officials and one of his employees has an insurance license.

The agencies can contest the charges in an administrative hearing.

Financial Services is reviewing 295 complaints against Prime where claims have not been paid. Prime owner Jerry Watson admitted last year his products, which went under several names, never were authorized to be sold in Florida or Colorado, but claimed they did not need to be because they weren't travel insurance.

Prime Travel's website now only states the company is in liquidation and Colorado insurance regulators say they do not know Watson's whereabouts. In the past year, officials have cited seven additional agencies for similar problems. Three of the seven already have settled their cases: Cruise Options Inc.of Plantation; Cruise Supermarket Inc. of Plantation; and High Performance Travel Inc., of South Daytona. As part of their settlements, the agencies agreed to make restitution to customers who have valid unpaid claims, and to switch any with unauthorized policies to legitimate travel-insurance carriers or refund premiums.

One of the six, Palm Coast Travel of Lake Worth and its affiliate Smartcruiser.com, also was charged with initially giving travelers AccessAmerica trip insurance policies, then transferring customers to Prime or Smart Travel Insurance, two companies not authorized in Florida to offer coverage.